2020 (5) TMI 88

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....d following grounds in the appeal: 1. The Ld. CIT ( Exemption) is unjustified, illegal and wrong for passing the order u/s 12AA(1)(b)(ii) of the Income Tax Act for rejection of Application to grant registration of Society u/s 12AA of Income tax Act, 1961. 2. The findings of Ld. CIT (Exemption) that the Society is not carrying out any Charitable activities is not correct since exemption u/s 12AA can be granted on future activities. 3. The findings of Ld. CIT (Exemption) that members are pooling their professional receipts so as to get exemption and manipulate their income is not correct. 4. The claim of Ld. CIT (Exemption) that assessee has failed to answer how it actually provide charity to people is not correct since the written ac....

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....duced huge capital investment of Rs. 52,00,000/- in cash. The capital has been mainly contributed by DR Luqumn Ali (President of the society) and Dr. Nisha Choudhary (Secretary of the society), who are having share of profit in the society at 50% and 20% respectively. The Learned CIT is of the view that these both individuals have pooled their individual professional receipt for their own benefit by way of the profit sharing ratio in the society. 2. The society is a commercial entity engaged in providing medical services on commercial lines and levying huge fee for the same, without any act of charity. 3. The profit motive of the society is evident from the very basis of the formation of the society where division of the profit amounts ....

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....contention he relied on the decision of the Hon'ble allowable High Court in the case of Hardyal charitable and educational trust vs Commissioner of income-II, (2013) 353 ITR 534 (All). 7. On the contrary, the learned DR submitted that the assessee society was constituted prior to 2009 and no activity thereafter has been shown by the assessee society in furtherance of its objects. He submitted that only activity have been shown in financial year 2015-16 and 2016-17, during which the assessee society had purchased land by way of the money contributed by the members of the society and thereafter construction by way of the loan funds from banks. According to him, the society was formed purely with the motive of distributing share of profit amo....

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....tional institution, is in the process of establishing such institutions, and receives donations, the registration under Section 12AA cannot be refused, on the ground that the Trust has not yet commenced the charitable or religious activity. Any enquiry of the nature would amount to putting the cart before the horse. At this stage only the genuineness of the objects has to be tasted and not the activities, which have not commenced. The enquiry of the Commissioner of Income Tax at such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The Trust or society cannot claim exemption, unless it is registered under Section 12AA of the Act and thus at that such initial s....